O'Donnabhain V. Commissioner - Arguments

Arguments

26 U.S.C. § 213 allows taxpayers to deduct medical expenses, but not cosmetic surgery, which it defines as "any procedure which is directed at improving the patient’s appearance and does not meaningfully promote the proper function of the body or prevent or treat illness or disease."

O'Donnabhain argued that her surgery was "medically necessary and directed toward the cure, mitigation and treatment of Ms. O’Donnabhain’s diagnosed gender identity disorder."

The IRS issued a memorandum stating that:

Whether gender reassignment surgery is a treatment for an illness or disease is controversial. For instance, Johns Hopkins Hospital has closed its gender reassignment clinic and ceased performing these operations.... In light of the Congressional emphasis on denying a deduction for procedures relating to appearance in all but a few circumstances and the controversy surrounding whether GRS is a treatment for an illness or disease, the materials submitted do not support a deduction.

In the clearest possible statement the US Tax Court declared "In its decision yesterday, the tax court said the IRS position was “at best a superficial characterization of the circumstances” that is “thoroughly rebutted by the medical evidence.”" The IRS case was based on unverified studies by Johns Hopkins' Paul McHugh, who worked for the Catholic Church. McHugh declared even before taking over the Johns Hopkins that it was his intention to close out any department that had anything to do with gender reassignment. He ordered a study of what he could find of the 24 women the unit had treated. Of 2,000 applications made by reassignment only 24 were chosen and they were chosen entirely for looks. Many questions remain about the religious bias of the IRS, as the results of the follow-up study were published in a Catholic journal the IRS would later use to close out deductions for surgery.